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Gold prices gain as bulls ponder U.S. rates below zero

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(Kitco News) - Gold and silver prices are moderately up in early U.S. trading Wednesday. There continues some safe-haven buying in the precious metals amid still-keen uncertainty regarding how the Covid-19 pandemic will ultimately impact the global economy. A weaker U.S. dollar index today is also working in favor of the precious metals market bulls. June gold futures were last up $6.20 an ounce at $1,713.20. July Comex silver prices were last up $0.076 at $15.785 an ounce.

The marketplace will be closely watching Federal Reserve Chairman Jerome Powell in a morning webcast to an economics group, and especially wanting to hear this thoughts on U.S. interest rates that could fall into negative territory. President Trump tweeted Tuesday he would be in favor of such occurring. This matter is of special interest to precious metals traders, as the knock on investing in gold has been that it offers investors no dividend. Interest rates at or below zero would work to eliminate the “opportunity cost” associated with owning precious metals.

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Traders and investors at mid-week are staying mostly upbeat despite increasing concerns about a second wave of Covid-19 infections hitting the world’s major economies that are starting to open back up. The top U.S. health official on Tuesday warned the U.S. Congress about the dangers of reopening the economy too early. Also, the specter of a renewed U.S.-China trade war, or worse, looms in the background after recent harsh rhetoric coming from both sides and directed at the other.

In overnight news, Eurozone factory output in March dropped 11.3% from February, which was a monthly record. Also, U.K. GDP dropped 2.0% in the latest quarter.

The important outside markets see Nymex crude oil futures slightly lower early today and trading around $25.50 a barrel. The U.S. dollar index is lower today. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.66%.

U.S. economic reports out Wednesday include the weekly MBA mortgage applications survey, the producer price index and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the overall near-term technical advantage amid an uptrend on the daily bar chart. A bullish symmetrical triangle pattern has also formed on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,666.20. First resistance is seen at this week’s high of $1,716.70 and then at $1,725.00. First support is seen at this week’s low of $1,692.10 and then at last week’s low of $1,683.00. Wyckoff's Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $16.505 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at $16.00 and then at $16.25. Next support is seen at $15.50 and then at $15.25. Wyckoff's Market Rating: 5.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.